E 7 ^-5 

.W33 

The Fin^r X^Af. of THE 



\lf le First Year of the Harding 
^°'"' ' Administration 

j By JAMES E. WATSON, Senior Senator From Indiana 




HE labors of Hercules were 
small chores compared with the 
task confronting the Republican 
party when it came into control 
IV )&) ^^ * government ten months 
j 2^^ since. The Republican national 
~ platform of 1920 had wisely 

\\arned the people not to expect 
the quick completion of the 
work of national reconstruction. The suc- 
cess of the administration in the work of 
restoration and rehabilitation can be meas- 
ured only by the magnitude of the obstacles 
it was necessary to surmount before a re- 
turn to national normality could be achiev- 
ed. No administration in all our national 
history has come to power confronted with 
problems of such complexity and difficulty 
as those which were inherited by President 
Harding and a Republican Congress. Those 
who declare that little has been accomplish- 
ed speak with small knowledge of the facts 
and little comprehension of the size of the 
iob inherited by the Republican party at the 
end of the Wilson era. 

We had passed through an era of public 
expenditures on a scale that staggers the 
imagination. In its train was left a na- 
tional debt establishing an interest charge 
greater in itself than the total of our an- 
nual national outlay before the World war. 
The public service had become habituated 
during the war era to an extravagance more 
easily established than uprooted. Not only 
had there been an enormous increase in the 
cost of ordinary civil administration through 
swollen public payrolls, but the public serv- 
ice had become thoroughly saturated with 
the spirit of reckless spending. We had 
become accustomed to speak of a million 
dollars as we were once wont, in the dis- 
cussion of public expenditure, to talk of a 
thousand. This tendency to public extrava- 
gance, which wasted billions of dollars un- 
der a national administration elected on a 
pledge to enforce simplicity and economy 
in the public service, could not be complete- 
ly corrected by a mere change in the chief 
administrative officials of the nation. It 
will be many a year before the spirit of 
reckless extravagance with which the pub- 
lic service was so thoroughly impregnated 
during the Wilson era, and which spread 
through state, city and county govern- 
ments to the smallest political divisions, 
has been curbed. It will be many a year 
before the people of this country cease to 
feel the elTects of the excessive taxation 
made necessary in part by war's emergency, 
but to no small extent by the reckless, riot- 
ous, wicked waste which characterized the 
incompetent and irresponsible conduct of 
the national business during the war and 
post-war era by the subordinates of the Wil- 
son administration. 

All about us at the beginning of this ad- 
ministration was the wreckage that was 



the aftermath not only of national but of 
international war conditions, fn our own 
land five million men had been taken from 
the field of production and set at the work 
of destruction of all values wliich is the 
business of war. The "World war had been 
over, it is true, for two years and four 
months, but at the instance of our own 
chief executive, the completion of peace 
had been delayed for many, many months, 
while a world constitution Avas being con- 
structed, and when the treaty itself was 
ratified by nations other than ours, it proved 
to be a compact productive of chaos rathei' 
than of order in Europe. If a rational treaty 
of peace had been completed, as it might 
easily have been, within three months of the 
signing of the armistice, and the nations of 
the Old World had been permitted to turn 
promptly to the task of industrial recon- 
struction, we might today be dealing with 
a stabilized Europe, well on the highway 
toward rehabilitation, rather than \vith a 
continent still ravaged by war and i-umors. 
of war and threatened with economic col- 
lanse. 

Let us consider for a moment the achieve- 
ments of tlie administration on the negative 
side. When a house is on fire the flames 
must first be extinguished before recon- 
struction can be begun or even planned. 
This administration has performed a serv- 
ice of inestimal)le even if fully unrealized 
value in halting some of the major tenden- 
cies of the previous administration. There 
has been no thought and no talk of tl^^v .sur- 
render of the rights, interests and W'^^als 
of this nation to any scheme of alien super 
sovereignty since March 4th, 1921. There 
have been no further steps toward the so- 
cialization of industry. There has been no 
.suggestion from high places that private pay 
rolls should be destroyed in order that pub- 
lic pay rolls may be lengthened. There have 
been no new departures in governmental 
infringement upon the just domain of legit- 
imate private enterprise. There have been 
no White House pronouncements expressive 
of a theory that government is the natural 
and proper enemy of business. The length 
of the steps we have taken since March 4th, 
1921, may not have been as great as many of 
us would like, but they have been in the 
right direction away from the quick.«ands 
of socialistic "idealism" and toward the old. 
solid rock of traditional common sense 
Americanism with its deep-grounded belief 
in the right and duty of the individual to 
work out his own salvation. We are work- 
ing away from the tendency which not long 
ago gripi)ed this nation to make the Amer- 
ican peoytle inmates rather than citizens of 
the republic. 

When the Republican party came into 
power ten months ago. it found a huge and 
increasing army of unemployed, with in- 
dustry and agriculture d«ep in the lenffthen- 



.V/33 



inf? shadow of depression. Partlj' this was 
due to tlie deinoialization of war; partly 
to mistaken national policies as to tariff and 
taxation. This paralysis of industry has 
not Iteen a creation, be it remembered, it is 
an inlieritance of this administration. We 
liad passed tluough an orgy of speculation 
and inflation incident to war; the day of 
deflation and of settlement, comparable to 
the headache after the debauch, was and is 
iit hand. A l^alloon ascension is more pleas- 
urable tlian the return to earth after the 
pas in the balloon has been exhausted. It 
is an ancient axiom that paying the fiddler 
is not so e.rhilarating as joining in the 
dance. Signing notes is often easier and 
more agreeable than paying them. The Wil- 
son administration gave the party and the 
Harding administration is paying for it. Yet 
there are those wlio wonder that Republic- 
an loiuiersliip, in the midst of its tremen- 
dously difficult and disagreeable task, is not 
at all times arousing wild enthusiasm in the 
performance of its part of the program. 

But MJiat has the Republican party done 
on the constructive side? 

First, we ended the technical state of wnr 
with Germany and Austria; an act essential 
to the ]irosperity of this country and the 
industrial rehabilitation of Europe. Owing 
to circu iistances for Avhich the Republican 
party ;\as not responsible, it was necessary 
to m;ike a separate peace with the central 
powers ())• have no peace at all. The new 
adminisliation could not well call a Avoild 
oonfcicncc for the promotion of peace while 
^<»4WJ«^('re still theoretically at war with two 
Ijiroi)ean nations. The Democratic minor- 
ity ojMiosed such a declaration of peace, 
bfttor fulfilling tlie party policy of keeping 
us out of peace than President Wilson ful- 
filled Ills policy of keeping us out of war. 

Next the Republican Congress passed an 
act restricting immigration in any one year 
to tluee per cent of the American popula- 
tion of suidi nationality. This was a step 
_in Aiju'iicanization long demanded and long 
•leaved. Without reflection upon the for- 
eigi? elements in our citizenship, which have 
contributed in generations passed immeas- 
uraldy to ilie national ujibuilding, the time 
has come when we sliould cease absorbing 
a larger alien pojtulation than it is possible 
for us to digest \\ith(iut serious internal 
disturbances. 

THE BUDGET SYSTEM 

The Republican Congress passed an act 
. -tablishiug a budget system, a necessary 
step in the policy of putting more business 
into government to which the party in pow- 
er is committed. The adoption of this sys- 
tem was posti)oned a year through the veto 
of a si til liar measure by President Wilson, 
liut aln-ady it has exercised a wholesome 
influence in the limitation of public expendi- 
tures. 

The farmers emergency tariff act was a 
necessary measure of relief in behalf of the 
n»tif)ti's »gri<-iiltnral producers. There is 
lnade(|iiate comprehension in Industrial 
centers of the hardships visited upon farm 
producers through wars reaction. Impover- 
ishment of the .American farmer means not 
only destrjiction of the purchasing power 
of half of «tir i)optilatlon. but a reduction 
In Munntlty of farm production and there 
fore ultimate Increase In cost of food to the 



city consumer. No apology need be offered 
for the several measures enacted by the 
present Congress for the betterment of the 
condition of the farmer; upon his prosperity 
the prosperity of the nation is dependent. 
An important feature of this measure is 
the dye embargo provision, highly important 
to the development of our essential dye and 
chemical industries. Other important en- 
actments of the Republican Congress may 
be briefly mentioned: 

Tlie faw establishing the Veterans' bureau 
and consolidating all agencies for soldier re- 
lief. This is one of a number of important 
measures in the interests of the "Wotld war 
soldiers, whose service to the nation, of in- 
estimable value, should and will be as fully 
recompensed as the financial ability of the na- 
tion will permit. Congress has not been nig- 
gardly in provisions for the soldiers. From 
the beginning of the fiscal year ending Juno. 
1918, to the pres nt time appropriations for 
soldier relief have aggregated $1,462,845,326.- 
00. As quckly as the financial condition of the 
country will permit the Republican party may 
be depended upon to develop policies in behalf 
of the soldiers which will demonstrate anew 
that this republic is neither forgetful nor un- 
grateful to its defenders. 

The law amending the War Finance Cor- 
poration act, permitting the issuance of securi- 
ties not to exceed a billion dollars to aid in 
the transportation and exportation of agricul- 
tural products and in providing credit for ag- 
ricultural purposes. 

The federal highway act, appropriating 
seventy-five million dollars for federal coopera- 
tion with the states in the building of high- 
ways. 

The maternity bill, pledged by the Republi- 
can party in the last campaign and advocated 
almost unanimously by the recently enfran- 
chised women of the land. The b:li provides 
for cooperation with the states in the protec- 
tion of maternity and infancy, and is voluntary 
rather than compulsory in its provisions for 
rnfoi cement. 

Tlie packers bill foi- the regulation of com- 
merce in livestock and dairy product.s, poul- 
try and eggs, places in the hands of the Sec- 
retary of Agriculture the authority and ma- 
chinery necessary to prevent abuses long com- 
plained of by farm producers, but avoids rad- 
ical measures destructive of the industry which 
have been proposed by demagogues and the- 
orists. This act settles a violent controversy 
of long standing. 

The bill prohibiting gambling in grain fu- 
tures, while permitting legitimate and useful 
dealing in the grain market intended to prevent 
purely speculative operations believed to be in- 
jurious to both producer and consumer. 

The naval appropriations bill was passed, 
with a saving of $86,000,000 below the sum 
carried by the same bill in the last Congress, 
and the army appropriation bill, which re- 
duced the standing army to l.")0,000 men and 
effected a .saving of $ If.. 000. 000 below the sum 
carried in the former bill when President 
Wilson refused to sign. 

The law providing $2.'i,000.000 additional for 
the Farm Loan board permitting it to function 
again in behalf of the farm producers of the 
country. 

The Edge bill amendment providing for fa- 
cilitating the organization of corporations for 
export tr.ide. 

The law providing for consolidation of inde- 
t>endent t<l<plioni' companies, making possible 
the elimination of lossts through unnecessary 
duplication of such lines. 

The law providing a method of control by 
the President of landing of submarine cables 
cnrrecllng a situation which became embarrass- 
ing under the former administration. 

The ;i(t of broadening the organic law of the 
Indian bureau, which will cure the evil of 



legrislative riders and appropriations, an abuse 
of long- standing in connection with the In- 
dian service. 

The law providing for an agreement among 
the western states for apportionment of the 
water of the Colorado river, settling an inter- 
state dispute of long standing known as the 
iT) Kansas-Colorado case. 

. Te law authorizing the completion of the 

*" Alaskan railroad at a cost of four million dol- 

^lars. The final estimates of the cost of this 

. ^road by the former administration having been 

^ found inadequate it- was necessary to provide 

the amount necessaiy to finish the line or leave 

it in an unserviceable condition. 

The act for relief of those who responded 
to the call of the government for the produc- 
tion of war minerals, releiving many producers 
- of small means who patriotically undertook 
rk to meet the war needs of the nation. 
> Amendment of the federal reserve act in 
A> regard to capital stock of corporations. 
^. An act to reclassify postal employees and 
;• readju.st their salaries on a more equitable 
basis. 

The Volstead act providing for the enforce- 
ment of the Eighteenth amendment. Regard- 
less of what one may think of national pro- 
hibition, there is no serious difference of opin- 
ion among patriotic people as to the impor- 
tance of enforcing laws, especially laws imbed- 
ded in the Constitution Contempt of one law- 
breeds contempt of all law, and contempt of 
law is not a thing that serious minded people 
can alt'ord to condone or encourage. 
CANAL TOLLS 

The (Senate passed an act to permit Ameri- 
can coastwise vessels to pass through the 
Panama Canal free of tolls. It is not the 
belief of a majority of the members of the 
Senate that this action involves the viola- 
tion of any tronty, but is an act of simple jus- 
tice to our own shipping, fitting in Avith our 
traditional policy of permitting only Amer- 
ican ships to operate in the coastwise trade. 

The House of Representatives has passed 
a bill creating a commission to refund the 
debts of foreign nations to the United 
States, aggregating eleven billion dollars, 
made necessary by the failure of the former 
administration to attend to this necessary 
matter at the proper time. 

The House of Representatives has passed 
a protective tariff measure and this subject 
is being made the basis of hearings by the 
Senate. 

Many other laws of importance have pass- 
ed either or both houses. Only those of 
general public interest have been mention- 
ed. They represent a volume of legislation 
not exceeded in size or importance by any 
Congress in the history of our country. 

After all the question of most immediate 
importance to the people of our country, 
next to the restoration of national pros- 
perity, is that of expenditures and taxation. 

The only genuine tax reform involves re- 
duction of expenditures. There never was 
and never will be a popular system of tax- 
ation. The experience of legislators who 
have had to deal with this problem is that 
the only enthusia.sm any man ever feels on 
the .subject of taxation is in behalf of some 
project to put the taxes on the other fellow. 
All that Congress can do in the absence of 
a reduction of government expenditures, is 
to adjust the burden in the light of a huge 
mass of conflicting interests and evidence. 
The idea that there is such a thing as a 
"popular" tax is preposterous. The idea 
that taxes can be placed on the backs of a 
very few is fallacious. Inevitably t^xes are 



charged as an element in the cost of opera 
tion by a corporation or of living by an in- 
dividual and are added to prices and rent.s. 

REDUCTION OF TAXES 

Since the Republican partv gained control 
of Congress in 1910, the effort of Republican 
leadership has been to reduce taxes by re- 
ducing expenditures. Until March 4th, 1921, 
we were handicapped by the fact that the 
money spending branch of government was 
in the hands of the opposition, and all we 
could do was to cut down appropriations as 
they were asked for. The first session of the 
Congress which assembled on March 4th, 
1919, reduced appropriations for the current 
fiscal year to four and a half billion dollar.-?, 
which was three-quarters of a billion dol- 
lars less than the appropriations for the pre- 
ceding fiscal year, a billion and a half less 
than the Wilson administration asked for 
its last year and three billion dollars les.s 
than were appropriated for the second fiscal 
year preceding. 

It must not be forgotten that half our ap- 
propriations are incident to past wars. This 
includes a billion dollars in interest on our 
war debt. The total appropriations for the 
fiscal year ending June 30, 1916, were $1,114.- 
400,701.09. For the year ending June 30, 1917 
-we had been in the war two month.s — they 
^vcre $1,625,419,995.53; for the vear ending 
June 30. 1918. they were $18,892 027.501.58: for/ 
the next fiscal year they were $27,065,148,690/ 
75. A Republican Congress came into powj 
in March. 1919. and repealed Avar appropi 
tions aggregating more than eight Jnllln 
f'nllars. For the fiscal year ending June •?!>.. 
1^20, the first under a Republican Congrc.<.<-;. 
appropriations aggregated $6,495,461,015.37; 
for the next fiscal year they sunk to $4,780,- 
829,510.35; and for the fiscal year ending 
June 30, 1922, our expenditures will be $3,909,- 
282,209.16. Congress reduced appropriations 
asked for bv the departments of $5,337,996,- 
723.23 to $1,428,714,512.77, and yet some people 
say this is a do-nothing Congress. 

A part of this reduction is due to the 
fact that during the year ending July 31, 
1921. 93,634 people were dismissed from the 
public service; since the armistice 320,278 
employees have been dropped from the civil 
payrolls. 

THE NEW LAW AND THE OLD 

Whatever may be said as to the neAv tax 
laAV-and as I have said before, every tax 
laAv is unpopular— it is infinitely better 
than the present tax laAV. It will produce 
$728,900,000 less than the present tax law 
this year; next year it will produce $525,000,- 
000 still less, or a total of one billion one 
hundred millions less per year than the ex- 
isting law. Further revision of the tax law 
within the next year is probable. No one 
not familiar with the difficulties and intrica- 
cies of tax revision, with the conflict of 
theories and interests involved, has the 
slightest conception of the labor and trou 
ble involved in a reconstrtiction of our tax 
laws, and few understand how many hour^, 
days and Aveeks of constant study, confer- 
ence and debate by experts and legislator.^ 
is represented in such a mea.sure as the one 
recently signed by the President. EA'ery 
laAv involving hundreds of items and affect 
ing millions of individuals and interests is 
necessarily a compromise; no thoughtful 
man expects a law framed in its every Item 



suit him. Tlie new tax law is the best 
that could be worked out of the conflicting 
elements involved; from that starting point 
we can work toAvard improvement. 

Thu? we have passed in review the work of 
the Congress during the first ten months of 
the Harding administration. It is not nec- 
e.'^.<ary to dwell at great length upon the 
achievement.^; of the executive department 
so notable that they have elicited the ap- 
plause not only of the nation, but of the 
entire world. Upon the initiative of Pres- 
ident Harding and his distinguished Secre- 
tary of State, America has taken the unques- 
tioned place of leadership in behalf of p«ace 
and a form of international cooperation for 
the good of humanity involving no sacrifice 
of the sovereignty of this republic, or of 
the principles and policies described by the 
general term Americanism. 

When President Harding issued the call 
for the Wa.shington conference, the longest 
step toward international peace with justice 
was taken the world has known in all its 
history. The straightforward declaration of 
Secretary Hughe.-s in favor of limitatien of 
armament on the existing ba'=;is of compara- 
tive sea power, the negotiation of the four- 
power treaty governing insular possessions 
in the Pacific, the progress made in estab- 
lishing justice as between China and tho 
other powers, the .suggestion of future vol- 
untary conferences for the consideration of 
international problems, constitute a pro- 
ram of tremendous significance and influ- 
<ice ui)on the future of civilization. This 
t inference has demonstrated that no super- 
^-Ifo^^erni/ient of force i» neces.sarv for the 
peaceful solution of internatioHal questions, 
if only the will for peace exists among the 
nations; and without that determination 
for peace all treaties are scraps of paper 
and all forms of super-government are worse 
than futile. 

To the .'solution of this problem of interna- 
tional relationships, rendered acute by the 
••onrsc of the preceding administration. 
President Harding has brought the irresist- 
ible power of enlightened common sense and 
a consecration to tlie welfare of humanity 
which is breathed in his every utterance. 
A new era of world history has "been opened 
with thf summoning of the Washington con- 
ference, and if the record of tho Harding 
administratitjn were to be closed tomorrow, 
it wonld take high i)lace among the great 
and inspiring periods of American history. 

^^le Washir.gton conference is the climax 
of a series of administration achievements 
which will ever make the Harding era mem- 
orable. Siirronndini; lii'^selt with a ciiliinet 
of such strength that its personnel stands 
out In vivid contrast with the shifting corps 
of advisers nnder a recent Presidency, Pres- 
ident Harding has from the beginning 
Id-oved that he did not regard the Presi- 
deney as a seat of .lutocratlc anthoritv, but 
that he believed in tlie virtne of common 
counsel, as Washington and Liiu-oin did 
Warren G. Harding is not a lotielv or a He- 
cinded President. The gates and the win- 
d(»WH of the White House have been thrown 
open and through (hem pjwses dav by day 
in Iticreasi.'ig iin-asnre the good will of tlii- 
.American peoi)|p (o the modext. devoted 
yet capalile, forceful, wise President. No 
one honestly doubts the earnest desire of 
Waren C. Harding to lead the American 



people out of the dangers and difficulties 
in which he found them upon his accession, 
to the broad, straight highway of national 
prosperity and progress, and tliere is a justi- 
fied increasing confidence in his ability pa- 
tiently but surely to get the nation "back to 
normalcy." 

It was characteristic of President Har- 
ding that one of his earliest acts bearing 
upon domestic problems Avas to summon to 
Washington representatives of business en- 
terprise, of labor and of the general public 
to consider the problem of unemployment. 
The problem of providing work and wages 
for every American toiler willing and anx- 
ious to work is one close to the heart of 
this administration. Already there are signs 
of revival, and when the tax bill, lifting 
.some of the loads from the back of business 
enterprise, is followed by a tariff bill writ- 
ten in the interests of the American pro- 
ducer, the endle.ss chain of American pros- 
perity, reaching from producer to consumer 
and back again, will begin to move. When 
the wheels are turning in the factories of 
America prosperity is sure to come to all 
Americans, whether their employment be 
in mine or mill, farm or store. American 
Ijusines is already on the upgrade and the 
present prospect is that by autumn, under 
the stimulus of favoring legislation and ad- 
ministration, the improvement will be too 
pronounced for the American people to 
think of risking a change in the control ol 
government at Washington. 

The decisive treatment of the Panama- 
Costa Rica dispute, the firm pronouncement 
upon the Yap controversy, tho clear declara- 
tion upon American rights in Mesopotamia, 
the unyielding demand that Mexico guaran- 
tee the protection of American rights of 
person and property before American rec- 
ognition is accorded, the clear announce- 
ment of American purpose to treat Ru.ssia 
as a civilized government only when it 
takes on the attributes of a civilized gov- 
ernment, these are chapters in American 
dii)lomacy all written within a year, which 
add new luster to the record of Republican- 
ism as a iiarty of constructive achievement. 
Tliat the record of the Republican partv 
during its ten months of complete author- 
ity at Washington is not flawles.s, is true. 
That there is any justification for tlie vio- 
lent partisan claim that because it has not 
done everything, it has done nothing, is 
grossly untrue. In ten brief months the 
administration has made a start— ju.st a 
start - l)ut a start in the right direction. 
There is being removed within tiie Repub- 
lican party that sense of responsibility and 
si)irit of solidarity wiiich in the long "vears 
of its continued sui)remacy made it the 
most efTiclent party organization this coun- 
try has ever known. Many matters have 
moved slowly during the i)ast ten months be- 
cause of the decline of the sense of party 
resi»onsiliility and party loyalty, tempting 
• acli ambitious leader to IxM'ome a leader 
(»f Ins own guerrilla force rather than an 
officer in a grand army. President Harding 
has pointed out the necessity of better co- 
(trdination. tnore subordination, among the 
representatives of Republicanism at Wa.sh- 
ington. The gently exercised authority of 
President Harding as party leader is grow- 
ing. In all this are signs of hope for Re- 
publh'an achievement at Washington in 1922. 



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